UK fines Standard Bank for lax controls

Companies / 23 January 2014, 3:51pm

Reuters

London - Britain's financial regulator has fined the UK arm of South Africa's Standard Bank Group 7.6 million pounds ($12.6 million) for lax anti-money laundering controls of corporate customers linked to people holding prominent public positions.

The Financial Conduct Authority (FCA), which along with its predecessor has been cracking down on how banks manage money laundering risks since 2011, said on Thursday it was the first time it had brought such a commercial banking case.

“If they (banks) accept business from high-risk customers they must have effective systems, controls and practices in place to manage that risk. Standard Bank clearly failed in this respect,” said Tracey McDermott, head of the FCA's enforcement and financial crime division.

The FCA reviewed 48 Standard Bank corporate customer files between December 2007 and July 2011. It said all had connections with so-called politically exposed people (PEPs) and highlighted “serious weaknesses” in how the bank applied its policies and procedures.

Regulators say that where corporate customers are known to be linked to a PEP, for example through a directorship or shareholding, banks should increase due diligence because these customers are likely to be in a higher-risk category.

During the relevant period, Standard Bank had business relationships with 5,339 corporate customers, of which 282 were linked to one or more PEPs. However, it had consistently failed to carry out adequate enhanced due diligence checks or conduct appropriate levels of ongoing monitoring, the FCA said.

Standard Bank, which cooperated with the FCA during the investigation, said measures introduced since 2010 included refreshing all active client files, conducting a compliance and business review and increasing resources to beef up its anti-money laundering compliance controls.

It noted that the FCA had not suggested the bank had ever handled the proceeds of crime. - Reuters